Analysts Cheer Vivendi CEO's Departure Amid Restructuring Hopes

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European media analysts on Friday cheered the departure of long-time Vivendi CEO Jean-Bernard Levy.

While they lauded him for his management of the entertainment and telecom conglomerate, they said his departure, confirmed by the company late Thursday, could be a step towards a sale or spin-off of assets, which many of them have long hoped for. Analysts have said that Vivendi's conglomerate structure has held back its stock price as the value of individual businesses can be less visible in such a structure.

Vivendi's stock, which recently hit nine-year lows, was up 1.4 percent at 14.40 ($18.09) in early trading.

"We see his departure as an incremental positive, given his long-standing opposition to a portfolio restructuring," said Sanford C. Bernstein analyst Claudio Aspesi. "We have advocated a major shake-up since...October 2008; in its absence, the share price could drift lower."

Vivendi includes various telecom businesses, Universal Music Group, a big stake in video game firm Activision Blizzard and French pay TV firm Canal+.

UBS analyst Polo Tang reiterated concerns about near-term weak trends at French telecom business SFR, but said the stock could get a boost Friday. "Even though the board has not made any announcement regarding a radical shake-up of Vivendi, we see Levy leaving as a positive for investor sentiment as it could make a change in the strategy more likely," he said.

Jefferies & Co. analyst Will Smith echoed that, highlighting that in his recent upgrade of Vivendi's stock to "buy," he "indicated a shake-up at Vivendi was overdue and increasingly likely."

Smith and others see increased potential for asset sales, which were part of an annual management retreat last  weekend. Market chatter has focused on a potential sale of Vivendi's stake in video game firm Activision Blizzard and a possible split into a telecom and media/entertainment entity.

Aspesi said he sees three options. One is a complete break-up of the company, which could value the stock at €30 ($37.68), he said. A creation of a separate telecom and pay TV business that would be split off from the rest of the company could be worth  €22.50 ($28.26), while sales of divisions could yield a value of up to €26 ($32.66), he said.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai
 

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